Finding a $1m uncashed cheque would be a dream come true for anyone, but for
the largest US city ever to file for bankruptcy, it could have paid for
vital services.

The cheque was found in a city hall desk drawer in March, a month after it was received. Four months later the city collapsed into bankruptcy, owing $18.5bn.

The $1m payment was from the local school system but was never deposited.

“Nobody sends million-dollar cheques anymore - they wire the money,” said a spokesman for Kevyn Orr, a bankruptcy expert hired by the state in March to stop Detroit's fiscal freefall.

“We have financial systems that are three, four, five decades in the past," he added. “If we can fix those issues, then we’ll be able to provide services better, faster, more efficiently and cheaper.”

The city’s income-tax receipts are processed by hand, part of the 70pc of accounting entries done manually, according to the spokesman. Last year the US Internal Revenue Service described Detroit’s tax-collection system as “catastrophic”, with some bills going uncollected for six years.

Detroit also doesn’t have a central municipal computer system, with each department buying its own machinery - much of which doesn't worked properly, said Orr.

Although it would hardly have made a dent in the city's debt, the $1m could have been used to pay those owed money, including all of the city’s active employees and its retirees. Properties that have tax claims with the city, numerous bondholders, business creditors and companies that insured Detroit debt are also out of pocket.

The largest creditor is the city's general pension scheme, which is owed $2bn.

The police and fire retirement scheme is owed $1.5bn, while the city's Downtown Development Authority is owed $33.6m.

Mr Orr has vowed that the city will continue to pay its bills and employees.